FCA tells insurers to come clean on add-on products

The City watchdog today fixed its sights on the £4 billion insurance add-on market, warning that consumers were “simply not getting value for money”.

Add-on products are usually sold alongside home and motor policies, credit cards, bank accounts and even holidays, but the Financial Conduct Authority believes people do not always understand what they’re getting.

As a result, the regulator has proposed a number of measures to overhaul the market. These include banning pre-ticked boxes to ensure consumers actively choose to buy an add-on, and improving the way they are promoted through price comparison websites.

Christopher Woolard, director of policy, risk and research at the Financial Conduct Authority, said: “There’s a clear case for us to intervene… Firms must start putting consumers first and stop seeing them as pound signs.”

Simon Burtwell, head of UK general insurance at EY, said: “The double whammy of a regulatory assault and VAT changes risk forcing insurers out of the market, which can only lead to rate rises. Longer term, this may be good for the industry because currently there is a general trend of consumers paying too little for their insurance products.”